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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Es = (%dQs) / (%dPrice)






2. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






3. Ei > 1






4. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






5. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






6. Ed = 0 - no response to price change






7. The imbalance between limited productive resources and unlimited human wants






8. A firm that has market power in the factor market (a wage-setter)






9. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






10. Ed > 1 - meaning consumers are price sensitive






11. The ability to set the price above the perfectly competitive level






12. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






13. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






14. Ed = 1






15. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






16. Total product divided by labor employed. APL = TPL/L






17. The additional cost incurred from the consumption of the next unit of a good or a service






18. Ei = (%dQd good X)/(%d Income)






19. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






20. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






21. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






22. A good for which higher income decreases demand






23. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






24. The total quantity - or total output of a good produced at each quantity of labor employed






25. Two goods are consumer substitutes if they provide essentially the same utility to consumers






26. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






27. A good for which higher income increases demand






28. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






29. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






30. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






31. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






32. Exists if a producer can produce more of a good than all other producers






33. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






34. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






35. The additional benefit received from the consumption of the next unit of a good or service






36. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






37. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






38. The difference between total revenue and total explicit costs






39. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






40. The change in quantity demanded resulting from a change in the price of one good relative to other goods






41. ATC = TC/Q = AFC + AVC






42. The difference between total revenue and total explicit and implicit costs






43. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






44. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






45. The price of a good measured in units of currency






46. Entry of new firms shifts the cost curves for all firms upward






47. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






48. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






49. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






50. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power